Parmalat Canada Takes on a New Name While Remaining Steadfast in its Belief in Dairy

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Iven Zanardo is apologetic when he calls in a couple minutes late for a scheduled 3 p.m. interview. The general manager of Foodservice, Ingredients and Export at Lactalis Canada blames it on the company’s European origins.

“I come from an Italian background, where time is merely a suggestion,” he offers by way of explanation. “As long as you have time to eat and have an espresso.”

Of course, the slight tardiness might also be because Zanardo is an extraordinarily busy man these days, his attention pulled in multiple directions.

His employer of more than 20 years is not only in the middle of a corporate rebrand from Parmalat Canada to Lactalis Canada — although he’s adamant it remains “business as usual” throughout the process — but is also still absorbing its recent $1.6-billion purchase of Kraft Heinz’s natural-cheese division, which added the Cracker Barrel, P’tit Quebec and aMOOza brands to an already strong portfolio.

And those are just the straight-ahead challenges. At the same time, Lactalis — like its immediate competitors Agropur and Saputo, as well as dairy industry counterparts all over the world — is also grappling with systemic issues that possess the potential to fundamentally reshape the industry.

Changing consumer tastes, an uncertain regulatory environment and a reduced emphasis on the role of animal products, including dairy, in Canada’s Food Guide (“disappointing,” Zanardo says), have all converged in ways that are forcing one of the most traditional of industries to re-assess its approach.

Zanardo, though, is adamant Lactalis Canada’s strong dairy roots — which date back to the late 1800s, when a group of dairy farmers began making cheese in Balderson Corners, Ont. — will remain a fundamental part of the company’s identity.

“We proudly reinforce that we’re Canada’s true full-dairy supplier,” he says forcefully. “If it’s dairy, we play in that space.” Indeed, Lactalis’ portfolio is filled with some of the best-known names in Canadian dairy — from milk brands such as Lactantia and Beatrice, to well-known cheese brands such as Black Diamond and Cracker Barrel and the yogurt brand Astro.

Even amid increased consumer skepticism about the value and role of dairy products in their everyday lives, Zanardo believes it’s crucial Lactalis continues to reinforce the vital role milk and dairy play in overall health, from brain development to bone health. “We just want to make sure people remember that,” he says.

At the same time, though, other well-established food companies are proactively adapting in order to keep pace with industry trends. Sylvain Charlesbois (a.k.a. “The Food Professor”), a professor at Dalhousie University’s Rowe School of Business who has written extensively about the food industry, points to Maple Leaf Foods’ move into plant-based foods with the 2018 acquisition of Greenleaf Foods as an example. “It’s something [Lactalis] could do eventually,” he says.

How these market trends will play out for Lactalis from a financial perspective will be a matter of some conjecture. The company is now controlled by the French Besnier family, which has succeeded in taking it private — the culmination of a years’-long process that began when it first acquired an 83.3-per-cent stake in the Italian company in 2011.

In its 2017 financial report, the company said its North-American operations accounted for 2.6 billion (approximately $3.8 billion) of the company’s e6.7 billion ($9.8 billion) in worldwide revenues, with Canada accounting for more than 60 per cent of the North-American total. That compared with global revenues of e6.5 billion in 2016, of which approximately e2.5 billion was derived from North America.

Canada is the third-largest of Lactalis’ operations, which span 79 countries, and is also home to a robust foodservice/B2B business that accounts for about 25 per cent of the company’s Canadian revenues. Zanardo takes obvious pride in the business, which has a presence in multiple segments — from fine- and casual-dining to the education and healthcare sectors.

Some partners have been with Lactalis since its first day of operations, he notes, with one in particular closing in on 60 years. Zanardo, though, refuses to divulge the names, explaining he doesn’t want it to seem as though he’s dismissing others. “It’s like one of those acceptance speeches where you forgot to thank your mother but you thanked your dog walker,” he jokes.

But, while lauding its strong customer base, Zanardo is confident there’s room for growth. “Until our product is found everywhere, we’re going to pursue that,” he says candidly. “You can talk about that being a lofty goal, but we’d like to have our product everywhere.”

At the same time, he’s heartened by Restaurants Canada’s efforts to push the Liberal minority government to work closely with the foodservice industry in addressing several key issues, including a national labour-force-development strategy and, more importantly, a continued emphasis on foodservice as a national tourism strategy.

“I’m excited when they talk about having foodservice as part of the tourism strategy,” he says. “To me that’s amazing, because I’d like to make cities within Canada food destinations as opposed to just tourism spots.”

Lactalis currently has 13 foodservice brands, including what Zanardo describes as “priority brands,” such as Président and Galbani. He’s also enthusiastic about the Canadian rollout of the U.S. yogurt brand siggi’s (“Simple ingredients, not a lot of sugar”), an Icelandic-style yogurt beloved by fans for its thick, creamy texture. “It’s very much a retail brand and we’re going to use [its] halo effect in foodservice,” says Zanardo.
He also expects the popular U.S. organic-yogurt brand Stonyfield, which Lactalis purchased from Danone for US$875 million in 2017, to make its way to Canada “eventually.”

At the same time, Zanardo says the company is paying close attention to the continued rise of milk alternatives, particularly among younger consumers. “We can’t hide from it,” he says. “We know it’s on trend. But, having said that, we don’t spend enough time promoting dairy.”

But staunch defence of dairy might not be enough to sway consumer sentiment. Fluid-milk consumption is trending downward, while a study by Mintel in the U.K. earlier this year found more than one-quarter of people aged 16 to 34 no longer use cow’s milk. In addition, one-third of 16 to 24-year-olds drank milk-based alternatives in the past year (oat-based milks, in particular, are on the rise), compared with 23 per cent of the population as a whole.

“We’re being asked all the time about our feelings on [the plant-based] trend and we answer the question very openly and honestly by saying ‘Yes, we’re exploring it and monitoring it,’” says Zanardo. “The decision for any large company is to determine when a fad becomes a trend, and when a trend becomes sustainable.”

Zanardo points out that Lactalis has a robust R&D facility in London, Ont. where staff are actively working on new product formulations with a specific emphasis on improving the quality of its products. “We’re constantly looking at ways of improving the process and getting to a more-natural and greener index,” he says.

An engaged and thoughtful interviewee, Zanardo chooses his words carefully over the course of a wide-ranging interview that drifts past the one-hour mark. His guarded tone drops just once, when the conversation touches on his longstanding involvement with Kids Help Phone (including sitting on its board of directors), which provides free counselling for kids and youth.

“It’s something that’s very near and dear to me,” he says, his voice brightening. “Mental health is an area we do not spend enough time on as a society. And the work that’s been done recently is outstanding. I’m so proud that [the company] continues to support Kids Help Phone, because kids and youth need help.”

Written by Chris Powell

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